Cap [CAP] has been on a downside, dropping 17% in the past day. The decline has been a steep one, with liquidation data from CoinGlass showing the extent of the losses.
Long traders have lost roughly $59,400 compared to shorts, who have lost just $395.63 in the past 24 hours. This represents 150 times more losses for longs, suggesting the extent of the selling in the market.
Despite the decline, AMBCrypto’s analysis found that the market still maintained an edge in seeing a rebound, with a higher target from the present level.
Capital outflows weigh on CAP
Capital flow in the market suggests that investors pulling out of the market have impacted the asset’s performance.
The pullout of funds is noticeable across the Spot and perpetual markets alike. Using Perpetual Market Netflow analysis, the flow turned negative in the past 24 hours, with a reading of -$2.26 million, according to data from CoinGlass.
When Netflow in the perpetual market is negative, it implies investors have pulled capital out of the asset, in this case, CAP. This is often linked to uncertainty about price direction.
In the Spot market, it is the opposite, with minor selling ongoing. CoinGlass data shows that CAP has a positive Netflow of $27,700. A positive Netflow implies there has been more CAP flowing into exchanges, a move that confirms more selling pressure.
While Spot Netflow suggests minimal selling, continued selling pressure such as this puts CAP at risk of further decline.
Liquidation clusters point to a possible reversal
The liquidation heatmap gave a closer view of the probable market direction for CAP based on the liquidation clusters. Currently, there are liquidity clusters above and below the price. These clusters tend to pull the price towards themselves.
Given that the clusters below the price are closer, there is a high chance the price could drop to this level. Importantly, lower clusters are known to be buy orders, implying that a price drop into this zone could act as a catalyst for an upswing.
If more demand returns as the price drops slightly lower into the marked clusters, it should help push the price forward into the upper demand level, with a target of around $0.12.
The current momentum makes this scenario likely, as sellers’ control of the market remains on the higher side and could push the price lower.
Positive Funding Rate keeps bulls in the market
The Perpetual Market capital outflow has not translated into completely bearish capital positioning.
CoinGlass reported that the Funding Rate, which categorizes positioning in an asset’s perpetual market as long-dominated (bulls) or short-dominated (bears), was positive.
A positive Funding Rate of 0.0050% at the time of writing shows that traders have positioned a notable portion of CAP’s $27.3 million in perpetual capital in long positions.
A scenario like this typically means the recent price decline is still a result of sentiment towards the asset. However, from a market positioning perspective, traders still maintain a significant long position, which could possibly set the tone for a rally or market rebound.
Final Summary
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CAP dropped 17% with long traders recording $59,400 in liquidations compared to just $395.63 for short traders.
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A positive Funding Rate of 0.0050% suggests traders maintain significant long positions, leaving room for a potential rebound towards $0.12.